'Housing market is best in 14 years’

BOOM and bust is back… Return of the gazumpers… 80 buyers chasing every house on the market… Are we heading for another house price crisis?

There have been a series of unsettling headlines in recent weeks on the back of a number of research results revealing that house prices are on the rise throughout the UK – fuelled by increased demand and a shortage of properties for sale.

Some politicians and commentators are grimly predicting another property price explosion leading to an unstable and dangerously volatile market.

Others point to the fact that prices are not rising anywhere near as rapidly as the boom of 2006-2007 and are being artificially inflated by the ‘London effect’.

So who is right? And what is the situation here in York?

The overall conclusions are that prices are rising, at the moment there are not enough properties coming to the market to satisfy demand – and that this is the ideal time to sell…

Nationally, house prices and sales are on the up – with sales reaching a six-year high, and prices, fuelled not just by booms in London and the South East but by a “broadening out” across the Midlands in particular, also steadily climbing.

And it looks as if that trend is set to continue. A report last week by the Royal Institution of Chartered Surveyors (RICS) concluded that a recovery “is well and truly under way” and predicted price rises to continue for the next five years at least.

Certainly York is playing its part in the national house price index rise. According to the latest figures there has been a near six per cent increase in property prices in the city – up from an overall average of £202,474 in January 2013 to £213,862 in January 2014.

This compares with an average year on year rise throughout the UK over the same period of 6.8 per cent – from £245,000 to £254,000 (in the wider Yorkshire and Humberside region average prices rose by 3.4 per cent from £166,000 to £170,000).

So are we set for a nightmare house price boom in York and surrounding areas? Not quite…

Prices are rising but we are far from the situation seen in the last big housing boom that may have helped set the scene for the wider economic crash of 2008.

Peter Docwra, Senior Partner at York-based Ashtons, observes: “We have seen property prices rise by at least five per cent in the last six months but to put that in perspective they are not yet back to 2007 prices.”

And – while naturally wanting to get the best price for their clients – few agents want to go back to that 2007 scenario. As Scott Anscomb, of Your Move Anscombs, says: “We do not want to see a situation leading to the market overheating, what we want to see is longer term, more gentle growth.”

That said, he adds: “With high demand and low supply it is inevitable that prices are going to rise – and there is a very considerable demand out there and not enough properties at the moment to meet that demand.”

Not enough properties to meet demand

There are a number of reasons for this supply-demand imbalance which has now, say some agents, become acute in York – there was a 31 per cent drop in properties advertised for sale in February 2014 when compared to February 2013.

The first and most obvious reason would be economic uncertainty, with the country as a whole still clawing its way out of recession. Anecdotally, this led to people “battening down the hatches”, cutting back on spending and certainly on large financial commitments such as house purchases.

But the RICS points to larger numbers of first time buyers arriving into the market, helped by more easily available loans and Government initiatives like the Help to Buy scheme. Good news in one way but not in others – first time buyers do not have homes to sell… stock is being removed from the market without being replaced.

“The growth in demand is not being met by new housing or homes coming to the market,” says the RICS.

Here in York, however, there is also another reason – a sudden and unexpectedly resilient rise in house sales throughout the sector.

Peter Docwra explains: “We have taken on eight per cent more houses this year than last, the difference is that we have sold 19 per cent more properties than last year.

“The last quarter of last year was very busy and the York property market started the year with significantly low stock level due to this high level of sales in November and December, 2013.”

The figures for overall sales in York back his comments. They reveal that in November and December, a traditionally quiet period in the property market, almost 300 homes sold in each of those months.

The spike continued in January when 225 properties sold – compared to 178 in January 2013.

Oliver Newby, of Stephensons, says. “I think it is worth noting that November and December proved to be good selling months for most agents when notoriously it is quiet and fairly tough. This had a knock on effect in January and February; with already low stock levels, more properties were sold and fewer properties came to the market.”

Not only does having fewer properties on the market mean rising prices – but it also, ironically, deters potential vendors.

“It is self-perpetuating,” says Ben Hudson of Hudson Moody. “People are saying we are not going to sell because we can’t find anything we want to move into. They look on Right Move or agents’ websites and don’t see anything they like and so decide they are not going to put their own house up for sale.”

Most agents, however, remain reasonably phlegmatic about the situation. As Ben Hudson, rather poetically, puts it: “As I am looking out of my office window the leaves are not even on the trees yet, the daffodils have only just come out, we have just arrived in Spring and it is early yet. I think that all those people who were holding back, saying let’s just wait until the garden looks nicer, or whatever, are going to look to sell.”

If there is any message on which all the city’s estate agents are agreed upon – it is that this is definitely a good time to sell…

“It is a phenomenal time to sell,” says Scott Anscomb. “There has been a big influx of first-time buyers coming out of rental and seeking to buy, thanks to the Government’s Help to Buy scheme and relaxed lending attitudes, among other reasons, and that new blood at the bottom of the market is adding confidence to the market and leading to very strong demand in all areas.”

Peter Docwra adds: “It is the best property market to move in for about 13-14 years.”

While Charlie Lancaster, of Lancaster Samms, says: “It’s a great time to sell for the simple reason that supply exceeds demand – in all sectors. I think people are just waiting to jump, they want to sell but are waiting to see if they can find something first. The solution would be for people to take the plunge and the market will start moving again in terms of supply. Yes, definitely, it’s a good time to put your house on the market.”